Robert Berger is working on something deeply futuristic: a hybrid of window shade and solar panel. It not only lets light in or out, it also powers your household gadgets.

But Mr. Berger, president of MW Canada Ltd., is not toiling in a hothouse tech firm. He's a third-generation champion of an industry most Canadians think of as a metaphor for the decline of Canadian manufacturing: textiles. But if it can negotiate an ever-shifting maze of trade rules, particularly in the United States, the battered industry stands to surprise Canadians with a value-added comeback.

"Imagine your window covering storing enough energy from the sun daily to power all your rechargeable home electronics," Mr. Berger says. His firm, based in Cambridge, Ont., is collaborating with universities on nanotechnology that makes textiles into powerful performers, from the solar blinds to materials that promise to replace car batteries, to construction materials that rival steel in strength.

"We need to be at the leading edge of all these technologies," Mr. Berger says. The new generation of textiles will be on the market in less than five years, he adds.

MW Canada was founded in Montreal by Mr. Berger's grandfather as Montreal Woollens in 1963. In a process of continual reinvention, the company has evolved from making fabrics for the clothing industry to supplying upholstery textiles, airplane blankets, health-care materials and water-filtration products.

Innovation by firms like Mr. Berger's helps explain why reports of the death of Canada's textile industry are greatly exaggerated.

The industry, it's true, has been clobbered by unfettered foreign competition, a high Canadian dollar and eroding free-trade benefits for much of the past decade. Between 2005 and 2009, for instance, textile shipments plummeted 43.5 per cent, while manufacturing as a whole only sank 18.1 per cent, according to Statistics Canada.

The firms that have survived this dramatic contraction are generally smaller and more nimble than in the industry of old. Many, like MW Canada, have ditched their old business models, which focused on high-volume commodity products, to become high-tech pioneers.

Having invested hundreds of millions of dollars in state-of-the-art machinery, plants and retraining for staff, these manufacturers are increasingly focused on products with specific applications - known, as a group, as technical textiles. These short-run, cutting-edge products are in demand for numerous industries, including defence, health care, energy, mining, construction and transportation.

While the commodity side of the business has turned into a race to the bottom that legacy companies cannot win, the new wave of technical textiles allows firms in Europe, the United States and Canada to compete again - in a value-added race to the top. The fast-growing market for technical textiles is already estimated to be worth $128-billion (U.S.) in annual sales.

The Conference Board of Canada is forecasting that the country's textiles and apparel industry will see a "modest profit" of $13-million in 2011 after recording losses for the past two years. The board sees profits reaching $97-million by 2015, even factoring in a higher loonie and climbing energy and raw material costs. Output and exports are also trending up after years of declines.

As for employment in the sector, the industry agrees that the figure of 43,526 direct and indirect jobs, recently computed for the Textiles Human Resources Council, is a reasonable estimate. But discrepancies in statistics gathered by the industry and government make it difficult to establish how much employment has fallen since the industry's heyday.

Despite the recovering profit and production numbers, the industry is having a hard time shaking its reputation as a hopeless case. The view of some, like Kathryn From, is that Canadian textile manufacturers never fully recover.

"They didn't change with the times, and frankly I think it is too late," says Ms. From, managing director of Bravado Designs Ltd., a Toronto-based maker of nursing bras. The company selects textiles purchased by the overseas factories that make its products. "I don't know why anybody would put money into the textile business in Canada unless it is a very, very niche opportunity."

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